For the quarter, FFO available to common shareholders amounted to $68.1 million, or 84 cents per share, compared to $70.9 million, or 88 cents per share, for the same period a year earlier. Those numbers include a four-cent impairment charge related to a write-off of a joint venture in the Boston area. Total revenues between January and March totaled $186.7 million versus $194.7 million in Q1 '08.
Last month, the company declared a cash dividend of 45 cents per common share, which represents an annualized figure of $1.80 per share, down from the previous rate of $2.56. The move is expected to help the company retain additional cash of approximately $62 million on an annualized basis.
As of March, the company's portfolio was 90.7% leased, a decrease from three months earlier when occupancy stood at 91.3%. In the conference call, Mitchell E. Hersh, president and CEO of Mack-Cali, attributed the decline primarily to Wyndham Hotels moving from 150,000 square feet at its business campus in Parsippany to a quarter-million-square-foot build-to-suit developed by Mack-Cali, also in Parsippany.
While Hersh maintained the company's properties outperform the markets in which it operates, he did concede leasing conditions are challenging. "There continues to be a great deal of uncertainty in the business sector," he said. "Businesses remain reluctant to make office space decisions and when they do, they are looking for shorter lease terms, lower rents and more flexibility. We continue to concentrate our efforts on keeping our properties well leased with a roster of credit-worthy tenants who in most instances, not withstanding market conditions, would prefer to stay where they are."
Michael A. Grossman, Mack-Cali's EVP, said that although leasing activity was up 20% in Q1 in comparison to the fourth quarter of last year, velocity was still below normal levels. He noted that most of the firm's recent deals are small transactions and very few large users are looking in the marketplace.
"We continue to experience downward pressure on first-year rental rates," he said. "But we have not seen an upsurge in concessions and free rent. We average less than one month free rent per deal, which is consistent with the past several years, and our TI costs are in line with previous quarters."
Hersh also revealed during the conference call that it has bought out SL Green's stake in the Belle Mead portfolio with a payment of $5 million and extended its $90.3-million mortgage with Gramercy Capital Corp. for two years. In settling the SL Green JV, Mack-Cali also obtained the rights to build a 205,000-square-foot building net-leased to Sanofi Aventis for 15 years in Bridgewater. Hersh said construction will commence on that project in the summer, with an estimated unleveraged yield on the project of close to 10%, including its fees.
In January, the REIT secured $64.5 million in mortgage financing from Guardian Life Insurance Co. of America secured by four of its properties in Clark and Red Bank. Yet Hersh said that obtaining secured financing in today's environment is difficult and leaves owners with very little flexibility. However, he maintained that the company will pursue nearly all avenues to raise capital, although he sounded less than enthusiastic about asset sales.
"The credit markets are paralyzed, so asset sales in my opinion would be the last and least likely situation you would consider," he said. "The risk of execution, even if you found a buyer, is enormous, and the pricing needs to be depressed because there is no active investment sales market."
Following the conference call, Mack-Cali announced a public offering of 10 million common shares at a price per share of $25. Merrill Lynch & Co. and Deutsche Bank Securities are serving as joint book-running managers. Proceeds will be used to pay down borrowings under its unsecured revolving credit facility and for general corporate purposes.
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